QandAs: Legal

What is a Cash Flow Statement?

Answer:
A cash flow statement is a financial statement

which reflects a company’s cash flow during a specified time period. CFS is an abbreviation used for cash flow statement.

A cash flow statement is a cash basis report which provides information on operating expenses, investing activities, and finance activities of a company. This information assists the owner of a company, or its investors, as well as potential lenders or creditors, to determine where monies are coming from and how they are being spent. This report is also assists in determining the probability of future cash flow. The cash flow statement is not the same as the balance sheet or income statement. Amounts that have been recorded on credit are not included in this report.

A cash flow statement is considered a standard financial statement. For publicly traded companies, cash flow statements became mandatory in 1987. For your small business, it may be the most important financial document you prepare.